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Priced out of the market

As everyone knows, the prices of puerh has been rising, rising, and rising. The reasons are many – more people are drinking it than ever before, and moreover, there are even more people who think it might be a good investment. I still remember when many cakes, new, could be had for a dollar or two. Well, those days are long, long gone. Back then, buying puerh to drink was a real value proposition – you can get decent tea for a small fraction of the price of a good oolong. These days, a good puerh probably costs more.

The problem is, like many other such goods, these days they are priced in such a way as to make it simply not worth it anymore. For example, recently I tried the Wisteria and Baohongyinji that was offered at both White2tea and Origintea. It’s not a bad tea – it has qi, for one, which is rare enough. It’s full, etc. It’s also ridiculously expensive, right in line with a real Bingdao gushu tea, and is absolutely not worth the money if you are thinking of buying cakes of it. These days real gushu teas routinely cost 2-3000 RMB a cake, and plenty of fake ones claiming to be real at least have real gushu prices, even if the leaves are not the real thing. This puts the tea simply out of reach of most people – ordinary or even not so ordinary folks. If you want, say, a tong of tea that costs 3000 RMB a cake, that’s 21000 RMB, or $3300 USD a tong for tea that is new. Frankly, that’s a lot of money, and given all the risks of storage that you run yourself if you store it – water, fire, mold, sun, etc etc, it’s almost insurance worthy.

Some tea producing areas are also slightly more worthy than others – Lincang, where Bingdao is located, happen not to be one of them. I find Lincang teas generally to be rather boring and subpar when compared with teas from the Yiwu or Menghai regions that are of similar level of quality. The prices of teas from Lincang used to be dirt cheap. Well, that isn’t true anymore.

I also get nostalgic when drinking some of my older teas that I myself bought and stored over the years, thinking that sadly, unless I pay through the roof, I won’t have teas of this type of quality to drink in the distant future. I had a Spring 2006 Bangwei the other day that I bought back when I was living in Beijing. It’s a wonderful tea, full of flavour and body and aging nicely. It cost me something like 150RMB a cake back then, which was a king’s ransom for a cake of new tea at that time. Now, the same thing, if made in 2014, would probably cost 1000 RMB or more a cake. It’s insane.

I wonder if this is sustainable – at some point, we’ll run out of buyers for these crazy prices and things might at least not get more expensive exponentially every year. It doesn’t mean prices will come down – we’ll never see 150RMB a cake for that Bangwei again. We might, however, see some of the more newfangled tea regions that command extraordinary prices come down a bit, especially if the aging isn’t going so well. For example, the Yuanyexiang which some of you know has been stagnant in price in the last few years, despite a heavy ramp up in prices of a lot of other teas. It can be found for about 1300 RMB a cake on Taobao, and they look to be the real deal. That’s a much cheaper price than a lot of new teas for a cake that’s over 10 years old now with some age. Why? Because it hasn’t really changed much in the last few years, and hasn’t really gotten much better. It’s a fine tea, and given the relative prices of new teas versus old, it might actually be a reasonable purchase again. As more and more older teas like this appear on the market, I wonder if it will keep a lid on new tea prices as people simply stop buying them. Of course, the same thing has been said years ago, and it hasn’t happened yet.

This is why I almost never buy new teas these days, and have also not bothered to sample many new teas – what’s the point if I am not in the market to buy them? I try a few every year, just to get my tastebuds going, but by and large, I no longer bother. I also find myself increasingly disliking the taste of new make puerh – when there’s so much older stuff I can have at my fingertips. Hopefully, perhaps, pricing adjustment will come, and not a moment too soon.

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Priced out of the market — 17 Comments

There were several things that contributed to the low prices of the past, making them artificially low IMHO. A several dollars for the a cake seems too low to me the $20-30 price range seems like a reasonable entry price for the amount of labor and changing of hands involved. I am of the mindset where buying quantities of young stuff is risky enough and costly enough that I would rather just not go through the hassle. Trying lots of tea I hate to find a bargain has not been enjoyable and when factoring in the cost and hassle of storage I would rather just pay inflated prices for something decent and older.

Lower prices in the past obviously had to do with the cost of producing the tea being very low. However, it was mostly the lack of demand – people didn’t really want the stuff, so it was sold to a small niche market with limited appeal. Nobody drank new tea 10 years ago, so there was no real market for it outside of the big wholesalers. It’s only in the last ten years when individuals literally started buying tons of tea. Even good tea was only maybe $10 a cake.

Sorry for my ignorance; I am just becoming familiar with your blog. If no one drank new tea ten years ago, approximately what was the median age of most tea drunk at that time? Would this given figure vary much if the retrospective time frame were doubled?

Many people would drink teas that were ten years or older. I routinely drank teas that were 20+ years – they were pretty cheap about 15 years ago and people bought a lot. Then as prices rose astronomically people stopped drinking because… well because they got expensive.

Heh, It would have been nice to get an overall review of that Bingdao. The description wherein is no different from the Mengdai Bingdao I’ve tried.

Not really sure that puerh has gotten more expensive than comparable quality yancha or veggie oolongs. The good stuff roughly starts at like 75 cents a gram, so let’s say a buck a gram. For a normal cake, that’s a $400 cake. If you know what you’re doing, you can get better tea. Of course, this is for an older cake that doesn’t have media buzz.

The problem really has to do with new cakes. Even expensive new cakes do not pass muster if you have oldies but goodies and know what good tea is supposed to be like (obviously to various degrees depending on experience and acquisitions). I have had only *one* truly excellent tea younger than 2010, which was the 2012 Yunhaizhidian “state forest” Yiwu. Thing is, they don’t really advertise very much at all. Beyond all the other problems like overpicking and fertilizer/chems issues, it just seems that the problem is more being allowed to buy good cakes (for whatever money) more than being pushed to overpay for ChenShenHao or Dayi.

What’s there to say in the review? It’s a good tea, great, perhaps, but not interesting enough for that kind of money. Given the alternatives, there’s no reason to buy these things. Just reading description you can say that about pretty much any tea – the differences are only apparent when you put the tea in your mouth.

I really think this is an exaggeration … You don’t, at all, need to shell out 2-3000 RMB for excellent tea. This year I’ve had very, very nice (new) tea, with true qi, for around 400 RMB a cake. And that was not some magic Taobao bargain … Maybe you are not looking in the right places. Forget about Bao Hong Yin Ji. It is probably excellent tea, but considering the price – which is even beyond ridiculous – White 2 Tea has much better options, I assure you. Try their blend “New Amerykah”, which is a beautiful tea.

Well, of course with ZY’s name and what not, this charges a premium, but if you want a gushu tea from one of the famous regions (which Bulang is not – Bulang is probably one of the cheapest) you need to expect to shell out easily 1500 RMB or more for a cake of new pressed tea. The great value is often in slightly older teas, as I’ve always said. Those are where the real bargains are these days.

Marshal N – why do you think the price of young puerh has risen so much relative to other teas? Clearly puerh was undervalued relative to other teas several years ago. Now however it seems that puerh is overvalued relative to yancha, green tea, etc. I can see why older tea, which is limited in quantity, has appreciated but I struggle to understand the level of prices for new puerh relative to other types of tea which are also popular in China. Is there that much of a puerh fad in China that drinking it has become that much more popular than drinking other types of tea?

I think it’s reasonable to assume that it’s the possibility of its value appreciating that makes it an object of speculation more so than other teas… As mentioned in the second line: “… more people are drinking it than ever before, and moreover, there are even more people who think it might be a good investment.”

Like what Balthazar said – have you seen pictures of people with pictures of their storage? There are folks in China with literally tonnes of tea stored up. That’s going to drive up prices, even though supply has increased a lot in the past decade

Well, that happened once in 2007 already, although it has recovered and more. As I’ve said before – if and when the people with tonnes of tea finally decide to start selling, we’ll have cheap old tea to drink. The problem is not all of them is going to be very good